With mortgage interest rates at 2004 levels, people are scrambling to refinance their mortgages even with severly tightened underwriting guidelines. Since 90% of mortgage companies are either out of business or severly understaffed because of the mortgage meltdown, we are going to dramtically understaffed underwriters being pressured to approve a tidal wave of mortgage applications.
Everyone scrambling to get refinanced can get an idea of the inner workings of a mortgage company by watching this I Love Lucy video. It's a wonderfully apt metaphor for what's about to happen in mortgage underwriting offices all around the country.
While you're watching the video, think of:
-Lucy and Ethel as mortgage underwriters.
-Chocolates as mortgage applications of excited mortgage candidates looking to capitalize on truly historical rates.
As the pace of chocolates picks up, the girls in the Wrapping Department get overwhelmed quickly. Two people can only do so much and the chocolate is going to keep on coming.
Relating to mortgages, as long as rates stay low the chocolate will continue to spit out. Understaffed lenders will be pressured to keep up and that may a bad thing for quality control. Even with draconian underwriting policies.
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